Insurers told to submit foreign ownership plans by early April

KUALA LUMPUR: Malaysian insurers have until early April to submit their plans to meet the foreign ownership limit set by the central bank.

Bank Negara Malaysia (BNM) governor Datuk Nor Shamsiah Mohd Yunus said the insurers must submit their concrete plans, including a timeline for the execution of the plans, by early April.

“The deadlines are imposed on a bilateral basis based on their plans as to how they intend to comply, with the conditions that they have accepted when they entered into corporate exercises,” she told reporters at a briefing today.

The foreign ownership limit was set at 70% in 2009 under the financial liberal-isation policy. Former BNM governor Tan Sri Muhammad Ibrahim set June 30, 2018 as the deadline.

Last year, Nor Shamsiah said foreign insurers will be allowed to divest their stakes or contribute to the B40 National Health Protection Fund. Late last year,

Singapore-listed Great Eastern Holdings Ltd, which fully owns its insurance arm in Malaysia, confirmed it was putting in RM2 billion as seed funding for the initiative.

The requirement for foreign insurers to pare down their stakes in local units is to prevent massive outflows of money and dividends from the country. According to BNM, foreign insurers repatriated about RM16.5 billion between 2008 and 2017 in the form of dividends.

Meanwhile, on the central bank’s RM2 billion land purchase, Nor Shamsiah said the internal review of the deal is still ongoing and will be completed this year.

“It is undergoing due process and I need to be fair to all parties involved to ensure that the due process we have in place is complied with,” she said.

In May last year, Finance Minister Lim Guan Eng confirmed that proceeds from the land sale and a RM1.199 billion redemption of redeemable cumulative convertible preference shares of the remaining RM1.2 billion owed to the Finance Ministry by Khazanah Nasional Bhd were used to make interest payments for 1Malaysia Development Bhd’s debts.

Muhammad, then central bank gover-nor, denied that political pressure had led to the land deal and said that the transaction was done at arm’s length with fair value as determined by an indepen-dent private sector valuer.

In November, BNM announced that it had, in August, commissioned a review of the land deal by an independent party and that the relevant BNM officers had opted to go on leave of absence.